Enhancing Policy Coordination for Global Integration and Cross-Border Infrastructure Development

Transcription

1 Enhancing Policy Coordination for Global Integration and Cross-Border Infrastructure Development Oxford Infrastructure Conference 1 July 2016

2 Infrastructure development faces many challenges Inception (PPP) Preparation Implementation No strategic plan & pipeline Lack of preparation funding Uncompetitive tendering Too few projects identified Biased demand forecasts Opportunistic renegotiation cycle related Unreliable cost-benefit and value-for-money analyses Delayed permits & land acqu. Stakeholder opposition Low innovation and productivity in delivery and operations Little PPP market sounding Inadequate PPP risk allocation Enabling environment related Weak public sector capacity Poor legal & institutional framework Lack of financing and guarantee schemes Corruption Multi-stakeholder dialogue and initiatives essential to overcome these challenges 1

3 Example: PIDA as 'mega plan' for Africa and as a starting point Problem: Infrastructure deficit in Africa limiting economic growth and prosperity Severe infrastructure gap in Africa Infra gap costing the continent ~ 2% GDP growth p.a. Significant economic and population growth by 2040 Low Inter regional trade; only about 10 to 12 per cent of African trade takes place among African countries PIDA created as a mega plan to address issue Continent-wide, aligned platform for priority regional infrastructure programs to be realized by 2040 Four key sectors: Energy, Transportation, Water, ICT Priority Action Plan (PAP): Subset of 51 infra programs to be implemented by 2020, with > $US 67B of capex African Strategic Infrastructure Initiative: Accelerate PIDA with Private Partnerships Core Public Partners African Union Commission (AUC) NEPAD Agency African Development Bank (AfDB) as core partners for ASII of the World Economic Forum Development Bank of Southern Africa and General Electric Africa acts as Co- Chairs to the initiative Business Working Group for private sector input (40+ companies, experts, and DFIs) 2

4 The Challenge How to identify which of these projects to prioritize? And how to maintain the political support and buy in throughout the process? 3

5 The Business Working Group: A Critical Success Factor Infrastructure/Mobility Energy Chemicals Businesses Acciona Agility Africa Arup A.P. Møller-Maersk AS Construction Products Holding Company (CPC) International Container Terminal Services Inc SNC-Lavalin Transnet Overseas Infrastructure Alliance (OIA) ABB Eskom General Electric (GE) Oando Plc Sasol Limited United Phosphorus Ltd Mining & Metals Investors & Fin. services Other African Rainbow Minerals Ltd ArcelorMittal Absa Capital Dev. Bank of Southern Africa First Bank Nigeria HSBC Investec Asset Management Old Mutual Prudential Plc Standard Chartered Standard Bank UBS Philips Diageo Plc Etisalat Group BT Yara Flour Mills of Nigeria Telkom SA Orrick IDC of S. Africa SAP Multilateral Organizations, Development Banks and Experts DFI's and institutions African Union Commission African Development Bank (Incl. ICA) IFC NEPAD Planning & Coordinating Agency World Bank Experts Harith Partners NEPAD Business Foundation Strategic Infrastructure Foundation The Boston Consulting Group (BCG) The Office of Gordon & Sarah Brown 4

6 Knowledge contributions served as foundation for acceleration of a PIDA pilot Replicable Acceleration with Public- Private collaboration Knowledge contribution: Three key reports developed prioritization A business approach to project acceleration: PIDA prioritisation Enablement and Capacity Building Transnational Mgmt. Managing Transnational Infrastructure Programmes in Africa Challenges and Best Practices Early Stage Finance A Principled Approach to Infrastructure Preparation Facilities 2012/ / /2015 Pilot selection from 51 PIDA programs 2012/2013 Pilot acceleration 2014/2015 On-theground impact: One pilot accelerated Developed methodology to identify projects of PIDA with high potential for acceleration Further assessed Public and BWG support Central corridor shortlisted for pilot acceleration Central Corridor reviewed into its 'sum of parts', multi stakeholder sessions as foundation Central Corridor underwent intensive timeline with scoping and prioritisation Mobilised technical support and delivered technical report on 23 prioritized projects 5

7 Methodology offers a private sector perspective and does not assess the general project quality What the methodology is... an assessment offering a private sector perspective on the projects a coherent presentation of a large dataset subject to defined trade-off preferences as good as the information provided a tool to support objective decision making open to consider all stakeholders' opinions as part of the fine tuning... and what it is not an assessment of the overall value of, and need, for the projects a universal tool that aligns diverse stakeholders' preferences able to make up for missing/incorrect data a tool providing a ranking and making the decision a strict ranked list of projects, not considering other key influencing factors Methodology helps to identify programmes with the highest potential for private/ public collaboration 6

8 Acceleration Methodology 4 Step Process A B C Decomposition & data collection Threshold-based grouping Two-lens project clustering Fine-tune project short list 51 PIDA projects & programs Immediate Midterm Longterm A B C D E F G H A B C D E F G H A B C D E F G H A B C D E F G H A B C D E F G H A B C D E F G H A B C D E F G H Decompose programs to ensure projects on comparable level Most relevant for Transportation & ICT Clarify linkages between sectors Key thresholds applied s grouped as: Pot. immediate private sector acceleration Pot. mid-term private sector acceleration Long-term project acceleration realization readiness/capacity: readiness Regional/country readiness & capacity value/impact: Direct project value Impact & secondary value creation Consider projects wellpositioned in matrices Further assess Public and BWG support Aim for diverse pilots: Sector, region, etc. Next step: Identify 1-2 pilots in project round tables 7

9 A Threshold-based grouping Key thresholds to ensure workable project setting Key thresholds Data quality/ availability environment complexity Threshold description Short-term acceleration projects require that key data is available and the quality of the data is sufficient to allow a review; Key data packages are: basics (scope/boundaries, key financial data, stage, timeline) Break-down of programs to a stand-alone project level Additional data with clear sources ( impact, tech. readiness, risks) Short-term acceleration projects require a stable project environment to ensure a reliable planning & acceleration setting; Key factors are: Political stability of the project region and political support for the project Reliable monetary/fiscal situation of partners for the project Absence of corruption for the project Given private sector capacity constraints for project acceleration, initially focus on projects with limited complexity; Key considerations are: Clear & manageable technical challenges, comparable projects in place Clear & limited stakeholder group to be involved; establish track record Presence or clear plan for a project lead implementation agency 8

10 B Two-lens project clustering Visualize project assessment in two matrices with axis showing intrinsic/extrinsic project variables Lens A realization readiness/capacity Lens B value creation & impact ii iv readiness impact & secondary value creation i Regional/country readiness & capacity iii Direct project value 9

11 B Two-lens project clustering Further review through two lenses covering relevant aspects & dimensions for a thorough project assessment Lenses Aspects Dimensions Criteria Metrics Lens A realization readiness/ capacity i ii Regional/ country readiness & capacity readiness Econ./Pol. stability Public sector r. & capa. Private sector r. & capa. environment preparedness complexity 8 criteria in total Split across dimensions 8 criteria in total Split across dimensions 1-3 metrics per criterion Aggregated to 0-10 score 1-3 metrics per criterion Aggregated to 0-10 score Lens B value & impact iii iv Direct project value impact & secondary value creation Monetary project value Strategic value associated risks Economic impact/value Environmental impact Social impact/value 6 criteria in total Split across dimensions 8 criteria in total Split across dimensions 1-3 metrics per criterion Aggregated to 0-10 score 1-3 metrics per criterion Aggregated to 0-10 score 10

12 B Two-lens project clustering Lens A Backup realization readiness/capacity lens: Proposed default weights i Weights for Regional/country readiness & capacity ii Weights for project readiness Dimension Criteria Criteria weight Dimension Criteria Criteria weight Economic/ Political stability 40% Political stability 30% Economic stability 40% Rule of law 30% environment Political project support policy environment 50% 30% Bureaucracy & red tape 30% 40% Physical environment 20% Public sector readiness & capacity 40% Private sector readiness & capacity 20% Government capacity Accountability, transparency & corruption 30% 40% Access to labor 60% PPP maturity 40% preparedness 30% complexity 30% Ext. stakeholder engagem.& align. Front-end loading/ prerequisite fulfillm. plan readiness Coordination needs & complexity Technical demands & complexity 30% 40% 30% 40% 60% Proposed dimension weight 11

13 B Two-lens project clustering Lens B Backup value creation & impact lens: Proposed default weights iii Weights for direct project value iv Weights for project impact & second. value creation Dimension Criteria Criteria weight Dimension Criteria Criteria weight Monetary project value 50% 20% Strategic value associated risks Direct & related ancillary project monetary value Market relevance & attractiveness Infrastructure project pipeline Risk exposure & mitigation options Strength of sponsor/ sovereign 100% 80% 20% 60% 20% Economic impact 50% Environmental impact 20% Social impact Direct community benefits Secondary industries Econ. efficiency gain Local biodiversity sensitivity 40% 40% 20% 50% Emission impact 50% Infrastructure accessibility Capacity building availability 30% 30% 30% Robustness of business case 20% 30% Additional local community impact 40% Proposed dimension weight 12

14 C Fine-tuning of programme shortlist based on dimensions taken from the Methodology Criteria Description Dimension in the Methodology 1 Private sector interest There should be a strong interest from the private sector BWG members on key elements of the programme Private sector readiness and capacity 2 Degree of sequential dependencies Key elements of the programme should not have strong sequential dependencies complexity 3 Maturity of public institutions Key elements of the programme should be in countries with mature public institutions Public sector readiness and capacity Economic/ Political stability environment 4 Stage of the programme Key elements need to be defined Key elements of the programme should not be too advanced (i.e., financing secured) preparedness 5 Clear acceleration levers There should be clear levers for acceleration in key elements of the programme There should be no prohibitive roadblocks complexity.. and finally, ensuring political alignment and support but only for any tie-breaking 13

15 Selection of a pilot project: Followed the well defined methodology with 3 shortlisted for consideration in January 2014 Phase # of programmes Decision criteria I IIa IIb Application of Step 1-3 of the methodology Threshold based grouping Two-lense clustering Regional/sectoral split Fine-tune short list Second private sector survey on a more granular level 1 Application of additional identification criteria: Low sequential dependence with other programmes Clear acceleration levers Central Corridor, Beira Corridor and West Africa Hub identified as priority projects 1. BWG Private Sector Interest Survey July 2013; Programmes are classified as 'high private sector interest' if at least two companies expressed their willingness to play a core role in the acceleration of the specific programme and at least two companies indicated to play a supporting role. 14

16 Adaptations to the ideal methodology were made due to data constraints and mandate to strive for identification of pilots Methodology Decomposition of programmes into comparable projects as the first step Run the methodology with comprehensive data for all programmes Establish clear ranking of projects based on outcome of methodology Base identification of pilots on objective criteria Challenges and opportunities assessed by implementation agencies Adopted approach Methodology run on a programme level due to limited data availability Some programmes were dropped due to limited data availability Group of 16 programmes with sufficient potential for immediate acceleration identified Fine-tuning requires some subjective assessment of acceleration potential Information collection partly relied on web research and expert interviews The methodology has been codified in an Excel based assessment tool 15

17 Ongoing Now: North-South Corridor context and aim Methodology Impact aim context South African president Jacob Zuma is the champion for the development of the North-South Corridor 1 (NSC) Following BCG's contribution to the acceleration of the Central Corridor 2, Presidency approached BCG to support work on NSC aim was to create a replicable methodology for selecting and accelerating projects on the NSC Also asked to plan a monitoring structure and mobilisation events to ensure progress Standard Work Plan Created a quantitative and qualitative assessment methodology to prioritise projects Developed a standard work plan for the assessment of project status Developed acceleration plans and monitoring framework to address bottlenecks Planned project mobilisation events Enabled project acceleration by identifying and addressing bottlenecks Increased high-level government oversight and control of projects by presenting in inter-ministerial meetings Caused automatic acceleration of slow processes because of top-level pressure Facilitated intergovernmental dialogue that was previously limited Enhanced public awareness of the importance of NSC through high profile breakfast at the WEF 3 and media interviews 1. Collection of infrastructure projects (e.g. roads, railways, ports, bridges, border posts) from Durban to Dar es Salaam, or from Cape Town to Cairo in the extended definition 2. Collection of infrastructure projects from Burundi, DRC, Rwanda, Tanzania and Uganda, 3.World Economic Forum Source: BCG analysis NSC Case Vignettes.pptx 16 Draft for discussion only Copyright 2014 by The Boston Consulting Group, Inc. All rights reserved.

18 Contact information: World Economic Forum Alex Wong Head, Global Challenge Partnerships Member of the Executive Committee World Economic Forum Tel.: +41 (0) Fax: +41 (0)

19 Appendix i. Link Library (Report links) ii. Transnational Infrastructure Programme Management iii. Early Stage Finance iv. Capacity Building

20 Appendix i: Link Library Link library : Africa Strategic Infrastructure Initiative Reports/ documents: Africa Infrastructure Brief Overview (2 pager) Overview: Accelerating Development of Africa Infrastructure (15 page, 3 year summary) Overview_Accelerating_Infrastructure_Development_in_Africa.pdf Transnational Program Management for Infrastructure A Business Approach to Acceleration A Principled Approach to Infrastructure Preparation Facilities Events : Africa Infrastructure Breakfast: Annual Meeting 2015 Summary (Davos) African Strategic Infrastructure World Economic Forum 4th Business Working Group Meeting 2014 (Sandton) African Strategic Infrastructure World Economic Forum in Africa 2014 (Abuja) African Strategic Infrastructure World Economic Forum in Africa 2013 (Cape Town) 19

21 Appendix II: Transnational Infrastructure Programme Management (TIPM) The TIPM paper describes challenges and best practices for the management of transnational programmes Target audience and objectives Target audience Programme and project responsibles in the public and private sector Policy makers in the position to influence the programme environment Objectives Provide an overview on the key challenges in the management of transnational infrastructure programmes in Africa Outline potential best practices to address these challenges Key findings Transnational infrastructure programmes classified into three groups according to their transnational specifics Key challenges identified with special relevance for Africa A best practice framework developed for the management of transnational infrastructure programmes Three possible approaches to harmonisation of regulations identified 20

22 Appendix iii: Early Stage Financing (ESPF) ESPF report outlines a Principled Approach to Infrastructure Preparation Facilities Target audience and objectives Target audience Programme and project responsibles in the public and private sector who seek to finance the preparation of projects Objectives Develop a new approach and potential model for project preparation financing based on public-private collaboration Outline potential sources for project preparation financing with a special emphasis on private sector contribution Key findings Existing models evaluated against a set of key success factors A new model for an Infrastructure Preparation Facility (IPPF) with publicprivate collaboration preparation costs should be covered by the project organisation as part of the project lifecycle costs Potential private sector sources are institutional and private investors, commercial banks and project beneficiaries 21

23 Appendix IV: Capacity Building Capacity building: Easy to use tools are being created for replication within a repository PIDA PAP Program Custom Assessment Tool Central Corridor Reporting Tool Used for programme shortlisting (7) Excel based tool including the PIDA PAP programme information Methodology codified Evaluation of programmes realization readiness/capacity value/impact Used information gathering on Central Corridor 121 projects listed Pre-populates template project fiches as defined Centralised data source for reporting 22